Tech stocks plunge with Intel

MartinCej

NEW YORK (CBS.MW) -- Technology stocks fell Friday, one day after Intel, the world's largest computer chip maker, warned its third-quarter revenue would fall short of expectations.

Major stock indexes, including the Nasdaq Composite Index, rebounded from earlier lows as investors fled Intel for other semiconductor companies and found bargains elsewhere after the initial sell-off.

The Nasdaq Composite Index
$COMPQ
fell 25.14 points, or 0.7 percent, to 3803.73, after plunging more than 200 points in early trading. The benchmark index ended the week down 0.6 percent. The Philadelphia Semiconductor Index
SOX, -3.86%
considered the benchmark for the sector, dropped 5.9 percent to its lowest close since August 4. The index closed 4.9 percent lower for the week.

Among other technology share measures, the Goldman Sachs Internet Index
$GIN
rallied to end Friday up 1.4 percent, and the firm's Hardware Index
$GHA
added a modest 0.2 percent.

For its part, Intel's stock
INTC, -1.70%
plunged $13.55 to $47.94, a decline of 22, percent on trading of 308 million shares during the regular session. The company said late Thursday that revenue in the third quarter would be 3 to 5 percent higher than the second quarter's $8.3 billion.

Santa Clara, Calif.-based Intel generated about 27 percent of its revenue from European operations last year, according to company spokesman Tom Beerman. He added that the company's "other geographic regions are still tracking according to our projections."

The warning comes as Intel and other technology shares are mired amid concern that cooling economies in North America and overseas -- exacerbated by soaring oil prices -- will hobble profit growth.

Unfortunately for the equity markets, Intel is one of only two stocks that is a member of all three major indexes: the Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average.

Goldman Sachs, Salomon Smith Barney, Deutsche Banc Alex. Brown, CIBC World Markets and Chase H&Q were among the firms that cut their ratings on Intel.

Not everyone jumped on the bandwagon, however.

"This dip ought to be a buying opportunity," said Robin Griffiths, chief technical analyst at HSBC in New York. "If you ask who the best chip company in the world is, the answer is still Intel."

Microsoft
MSFT, -3.39%
the other member of all three indexes, fell 94 cents to $63.25.

Compaq Computer
CPQ
moved quickly to assuage its shareholders' concerns about PC demand.

"Our worldwide momentum is clearly continuing and European demand is currently tracking within our expectations," said Peter Blackmore, a senior vice president in sales and services. Compaq's stock rose $1.75 to $29.63.

Hewlett-Packard
HWP
shares also resisted the broader decline after the company said it'll buy back $1 billion in stock and named CEO Carly Fiorina as chairman. Hewlett-Packard rallied 9.7 percent.

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